Telcos face challenge of networked devices

The phone industry is preparing itself for a profound transformation of its market, with the world turning to voice and messaging apps like Skype and abandoning traditional phone calls and texts.

There are only two alternatives: "Either you turn your business upside down, or you will be turned upside down," Ralph de la Vega, a top manager with US telecom giant ATT, has warned.

At the same time the sector is experiencing new opportunities. "All the networked devices must be connected together and - hey - that's exactly what we do," de la Vega said.

He predicts that within a few years, thanks to the so-called Internet of Things, there'll be 10 times more networked machines in the world than people.

For a century, the telecom industry worked to allow people to talk to each other over the telephone - "and now voice telephony is only like noise on the line," says Hans Vestberg, chief of the network equipment supplier Ericsson.

The digital revolution has hit every sector.

At the recent Mobile World Congress in Barcelona, Ericsson announced a collaboration with online retailing giant Amazon in the cloud business. They want to seize new opportunities such as the Internet of Things and in the analysis of large amounts of data.

The chiefs of the leading mobile phone service providers continue to call for better conditions for their businesses and further investment in the network.

"We must be rewarded for this huge bet on the transformation of the business," says Vodafone chief Vittorio Colao. Policy must ensure that there is no dominant player in the digital business and its various ecosystems, he said.

The mobile providers have complained for years that they have invested billions in network infrastructure, but don't get any share of the revenue from online businesses like Facebook or Google which use that infrastructure.

In return, the internet companies argue that their services make money for the mobile providers through data-use charges.

The head of the Spanish telecom giant Telefonica, Cesar Alierta, says regulation must be changed so that network operators and internet companies face the same regulatory framework.

Services like WhatsApp have replaced - for a lot of customers - the SMS service provided by the network operators. That and the big fall-off in traditional voice telephony has put the turnover of the telecom companies under pressure.

Source: DPA

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